WATERLOO, ON, Oct. 13, 2004 – Almost seven out of 10 Canadians are concerned about how they’ll handle their mortgages, credit card and other debts if interest rates keep rising, according to a national survey for Manulife Bank of Canada.
And almost three-quarters of Canadians surveyed by Maritz Research say they gained little or no ground in reducing their debts or increasing their savings in the past year.
The national poll of 2,000 Canadians conducted in late September found 68 per cent worried about rising interest rates. Mortgage costs were cited as the lead concern by 27 per cent, followed by another 17 per cent saying credit cards are their biggest worry if rates rise. Eighteen per cent believe car loans, lines of credit or other loans are their top reason to fret, while 29 per cent said they have no financial worries at all.
“What this suggests to us is that most Canadians are looking for ways to simply deal with their debts,” says J. Roman Fedchyshyn, President and CEO of Manulife Bank of Canada. “Building wealth goes beyond finding the lowest mortgage rate or best investment. It really starts with a simple method to ensure your income works as hard as it can to reduce your debt.”
Most say debt remains the same or higher
Fully 76 per cent of those surveyed said their total household debt in the past year has stayed the same (53 per cent) or increased (23 per cent). Less than one in five (19 per cent) say they put a dent in their overall household debt in the past year. When asked a separate question about their
monthly interest costs, almost four out of five (79 per cent) said they did not know how much cash they pay in monthly interest. The results are very similar, regardless of whether they own a home.
“The struggle facing many Canadians is that reducing debt is difficult, especially when they have numerous accounts and loans,” Mr. Fedchyshyn said. “We launched Manulife One five years ago this month to help Canadians pay off their debts faster and also to give them a simpler way to handle their money.”
How Manulife One works
In October, 1999, Manulife introduced Manulife One, known as a ‘flexible mortgage account’, to the Canadian marketplace after studying similar accounts in Australia and Britain.
In addition to using variable rates to help lower interest costs, Manulife One also uses income to pay down consumers’ total debt until they need to draw the money back out for their monthly expenses. They have the potential to pay down their mortgage much faster and pay considerably less in interest payments.
“We recognized Canadians can benefit from being able to deposit their incomes directly against their mortgage and other debts, until they need to use that money for their monthly expenses,” Mr. Fedchyshyn said. “Then, whatever additional dollars are left over at the end of the month automatically pays down their principal – without the mortgage holder having to permanently lose access to that money.”
Manulife Bank has developed an interactive demo on their web site (manulifebank.ca) that enables viewers to see the impact of automatically applying their income against a mortgage. Their web site also boasts a “Satisfaction guarantee” that the Manulife One account delivers on its savings and convenience or they’ll cover some of your costs to “go back to banking the way you were.”
The recent survey by Maritz Research has a margin of error of +/- 2.19 per cent, 19 times out of 20. For detailed results, see Manulife Bank’s related Fact Sheet on the survey.
About Manulife Financial
Manulife Financial is a leading Canadian-based financial services group serving millions of customers in 19 countries and territories worldwide. Operating as Manulife Financial in Canada and most of Asia, and primarily through John Hancock in the United States, the Company offers clients a diverse range of financial protection products and wealth management services through its extensive network of employees, agents and distribution partners. Funds under management by Manulife Financial and its subsidiaries were Cdn$360 billion (US$269 billion) as at June 30, 2004.
Manulife Financial established Manulife Bank in 1993 as the first federally regulated bank to be opened by a life insurance company following Canada’s financial reform legislation of 1992. Manulife Bank provides innovative deposit and loan products to help individuals make the most of their financial plan.
Manulife Financial Corporation trades as ‘MFC’ on the TSX, NYSE and PSE, and under ‘0945’ on the SEHK. Manulife Financial can be found on the Internet at www.manulife.com.